Generators ink deal to keep coal burning at Huntly

Monday, 4 August 2025

The agreement will see Genesis halt plans to finally retire one of its three Rankine turbines next year.

The country’s big four power companies have announced they have reached a deal that will see them in effect jointly foot the bill for a 600,000 tonne winter coal stockpile at Genesis’ Huntly power station.

The agreement, which is subject to Commerce Commission approval, also ensures the power station’s three Rankine turbines, which are capable of burning coal, gas or charcoal-like pellets will remain running until at least 2035.

The widely expected agreement, which should be in place by January, is a bitter-sweet moment for the industry.

It is designed to reduce the chance of power shortages in the medium term and reduce the risk Genesis faces in maintaining standby generating capacity, but at the same time it reinforces the generators’ reliance on carbon-emitting thermal energy for several more years.

Genesis announced in 2015 it would retire its two Rankine turbines in 2018 and stop burning coal.

But it subsequently canned that plan and brought a third previously-mothballed Rankine unit back into service to add to its coal-burning capacity.

The Huntly Power Station also has another two turbines that can only burn gas.

Genesis is continuing to hold out the hope of switching away from coal to carbon-neutral thermal energy in future.

A switch to burning “biomass”, which is viewed as carbon-neutral, is still a possibility

The company was “actively progressing its investigation of biomass as a fuel to gradually displace coal” it said in its statement to the NZX on Monday.

Few details of the agreement have been released, but it is taking the form of Meridian, Contact and Mercury Energy agreeing to buy options to acquire a total of up to 150 megawatts of electricity from Huntly and “support” the 600,000-tonne coal reserve.

Prior to the announcement, one of Genesis’ three ageing Rankine units had been due to be decommissioned in February.

Chief executive Malcolm Johns said that keeping it in service until 2035 instead would require “significant investment”.

“The agreements announced today are essential to making that investment and ensuring a fuel reserve is in place for energy security.”

Karen Boyes, executive director of the Major Electricity Users Group (MEUG), which represents major industrial and commercial users of electricity, questioned whether Contact, Mercury and Meridian had agreed to underwrite enough thermal capacity and coal.

“Well done to the four large generators for their initiative to establish crucial thermal back-up and we wish them well in their efforts to gain approval from the Commerce Commission,” she said.

“However, we note that the firming deal is for 150MW, which is a relatively small amount compared to winter peak demand of around 7000 MW.”

While the coal reserve of 600,000 tonnes “sounds impressive”, MEUG’s members wanted know “how much electricity this will create, especially in the context of New Zealand demand of about 40,000 gigawatt hours” of power, she said.

Meridian said in a statement to the NZX that it was investing heavily in new renewable generation but the agreement was “an important step while that new generation is being built”.

“The country was hit hard last year by an unexpected and significant shortage of gas, and that problem is not going away any time soon,” its chief executive Mike Roan said.

The share prices of the four generators were little changed when trading opened on the NZX in the wake of the announcement.

CORRECTION: An earlier version of this story incorrectly stated the “firming” options totalled 250 megawatts, rather than 150MW (Amended 1.12pm, August 4, 2025).